Is It Too Late to Start a Pension at 45? Experts Weigh In

Starting a pension at 45 is not only possible but also highly advisable. With pension auto-enrolment set to commence in just a few months, taking proactive steps now can yield significant long-term benefits. This guide breaks down why you should consider starting a pension at this stage in life.

Why Age 45 Is Not Too Late for a Pension

Expert Opinions
Kristen Foran, national sales director at Zurich Life, emphasizes, “Age 45 is certainly not too late.” With advancements in healthcare leading to longer lives, the age at which individuals begin to think about retirement has shifted dramatically.

The current State pension sits at about €15,000 annually—questioning whether you can realistically live on that amount is crucial. Most people will find that they need significantly more to maintain their lifestyle.

The Changing Landscape of Retirement

Increased Longevity and Its Financial Implications

People are living healthier and longer lives. In Ireland, men can now expect to live until 85, and women until 89. This means retirees may spend 19 to 23 years post-employment pursuing hobbies, travel, and other pursuits.

Financial Considerations

Modern life has brought several shifts, including:

• Longer Education: More people are spending years in education before entering the workforce.
• Delayed Homeownership: First-time home buyers are entering the property market later in life.
• Supporting Adult Children: With the average age to move out now at 28, many adults find themselves supporting children as they transition into independence.

These changes highlight the importance of financial planning and making provisions for retirement.

The Pension Gap: A Cause for Concern

Currently, one in four individuals aged 55-69 in Ireland do not have a private pension. With more than 10% of seniors at risk of poverty, it’s clear that relying solely on the State pension is inadequate for a secure retirement.

Understanding the Financial Requirements

Foran advises that those aiming for a comfortable retirement should consider their desired lifestyle and calculate the necessary income post-retirement. For example, if you want an annual income of €33,000 (including the State pension), you’ll need to account for the contributions and returns necessary to achieve that figure.

Maximizing Your Pension Contributions

The Importance of Starting Contributions

At 45, you still have about 20 years to grow your pension, which includes potential tax relief benefits—40% for higher-rate taxpayers and 20% for those at the standard rate. Employers may also contribute funds, adding to your retirement savings.

Higher contributions may feel daunting, but with strategic planning, the actual cost can be lower than expected thanks to tax relief. For instance, contributing €500 a month effectively costs €300 for higher-rate taxpayers.

A Target to Aim For

Using a pension calculator can aid in determining how much to contribute based on desired retirement income.

• Starting at Age 25: Contributing €125/month could suffice.
• Starting at Age 35: Monthly contributions would increase to €173.
• Starting at Age 45: Contributions rise to €269/month, or €161 after tax relief.

Yes, starting later means higher monthly contributions, but it is crucial not to be discouraged.

What to Expect with Upcoming Auto-Enrolment

The Upcoming Change

From January 2026, workers aged 23 to 60 earning at least €20,000 will be automatically enrolled in a new Government initiative called My Future Fund. Employers will initially contribute 1.5% of gross earnings, with further increases anticipated over time.

Navigating Your Options

If you already have a pension plan, ensure that it runs through your employer’s payroll to avoid being auto-enrolled. Higher earners may prefer setting up private pensions, where they can benefit from more generous tax relief.

Conclusion: Start Planning Now

If you’re 45 and haven’t yet established a pension, now is the optimal time to act. With the potential for contributions to build over the coming years, you still have a significant runway to secure your financial future.

Take Action
Engage with a financial advisor today to explore the best options available to you. Establish your contributions before November to avoid being auto-enrolled in default plans that may not provide optimum benefits.

By acting now, you can turn what may seem like a late start into a solid financial foundation for your retirement. Don’t leave your future to chance; make your pension a priority today.